Iron ore futures rose for a fifth straight session on
Friday, with the benchmark Chinese index hitting its highest in five months,
after data showed Brazil’s exports of the steelmaking raw material shrank in
December.
Iron ore restocking ahead of the Lunar New Year
holidays this month in China, which produces half of the world’s steel supply,
also continued to support spot and futures prices.
The Dalian Commodity Exchange’s most-traded iron ore
contract, with May expiry, ended 1.6% higher at 666 yuan ($95.53) a tonne,
after hitting 670.50 yuan earlier in the session, its highest since Aug. 6,
2019.
On the Singapore Exchange, the front-month February
contract was up 0.5% at $92.30 a tonne in afternoon trade.
Iron ore exports by Brazil, home to the world’s top
producer Vale SA, dropped to 24.67 million tonnes in December from 27.25
million tonnes the month before and 33.20 million tonnes a year earlier,
official data on Thursday showed.
Iron ore’s availability remains a key concern for the
market after the commodity rallied last year to a five-year high, driven mainly
by supply disruptions.
Last month, Vale flagged reduced output in the first
quarter of 2020 as safety checks involving its mining facilities continued
following a tailings dam disaster in January last year.
The light trading volumes, however, suggest that the
price gains were mainly sentiment-driven, a Shanghai-based trader said.
“We don’t see very strong demand for iron ore these
days, but there’s good news that lifted market sentiment,” the trader said,
referring to the latest monetary policy-easing move by China’s central bank.
The People’s Bank of China announced on Wednesday a
reduction in the amount of cash that all banks must hold as reserves, freeing
up more funds to shore up a slowing economy.
Fundamentals
Prices for spot cargoes of benchmark iron ore with
62% iron content for delivery to China gained 50 cents to settle at $93.50 a
tonne on Thursday, the highest in two weeks, SteelHome consultancy data showed.
The most-traded steel rebar contract on the Shanghai
Futures Exchange was down 0.6%, extending losses amid tepid demand for the
construction material and rising inventory in China over winter.
Hot-rolled steel coil, used in cars and home
appliances, slipped 0.8%.
Dalian coking coal was up 0.5%, but Dalian coke
declined 0.6%.
Shanghai stainless steel futures slumped 2.3%,
closing at their lowest since Dec. 6, 2019.
($1 = 6.9716 yuan)
Source: mining.com